Brunei, Malaysia and RI plan Islamic money market

Brunei, Malaysia and RI plan Islamic money market

BANDAR SERI BEGAWAN (AFP): Brunei, Bahrain, Indonesia and Malaysia are to jointly launch an International Islamic Money Market (IIMM) in October, the Brunei government announced Thursday.

Brunei deputy Finance Minister Selamat Munap said the newly established Brunei international financial center would cooperate with the central banks of the three other Muslim countries to set up the global Islamic money market.

Launching of the IIMM will be in October, the government said in a statement.

"There is now some measure of agreement in principle among the respective authorities on the need to focus on specific matters relating to the establishment of the IIMM," Selamat said.

A working group consisting of officials of central banks and Islamic banks from the countries met here Tuesday and Wednesday to hammer out the details.

Selamat said it was agreed that the central banks of Malaysia and Indonesia would focus on product development and the Bahrain Monetary Authority would work on system development.

"These authorities will also be responsible for obtaining Shariah (Islamic law) experts from various regions to help them and Islamic banks to identify liquid Islamic instruments that are Shariah-compliant as well," he said.

He said Islamic financial authorities in Asia and the Middle East have voiced concern on "the shortage of such instruments which could be used to manage liquidity between Islamic banks as well as between central banks and Islamic banks in both international and domestic transactions."

"Instruments that are in supply today are not enough to satisfy demand for Islamic financial instruments in terms of availability, diversity and sophistication," he said.

The establishment of an Islamic rating agency was also proposed. An international accounting and auditing organization for Islamic financial institutions is already headquartered in Bahrain.

Brunei's ruler, Sultan Hassanal Bolkiah, in July announced the establishment of a global financial center in his oil-rich kingdom. One of its goals was the development of a niche market in Islamic financing.